Problem 25-2: OASDI and HI Tax Deductions Using the information provided for Nathan and Company, compute the following for each employee: A. Table 1 - For each employee, for the week ending December 31, compute (1) amount subject to OASDI tax and (2) amount subject to Hl tax. Then compute (3) employee's OASDI tax deduction for week and (4) employee's Hl tax deduction for week. B. Table 2 - Compute (1) employer's share of OASDI and (2) employer's share of HI taxes for week (by deducting employees' deductions for week from total owed). C. Table 3 - Compute (1) employees' gross pay subject to OASDI tax from 1/1 through 12/31, (2) employee's gross pay subject to Hl tax from 1/1 through 12/31, (3) employees' OASDI tax from 1/1 through 12/31, and (4) employees' Hi tax from 1/1 through 12/31. D. Table 4 - Compute (1) employer's share of OASDI tax for entire year from 1/1 through 12/31 and (2) employer's Hl tax for entire year from 1/1 through 12/31 (by deducting employees' deductions for entire year from total owed). Note: Assume OASDI ceiling of $118,500, OASDI rate of 6.2%, and Hl rate of 1.45%. Year-to-Date Gross Pay as of Week Ending December 24 Name Problem 25-2 Table 1 (1) Weekly Gross Pay Subject to FICA OASDI Tax Gross Pay for Week Ending December 31 (2) Weekly Gross Pay Subject to FICA HI Tax (3) Employee's OASDI Tax Deduction for Week (4) Employee's HI Tax Deduction for Week Alexander, R. $114,175.80 $ 560.40 $560.40 $560.40 $34.75 $8.13 Kawanishi, K. $117,395.60 835.80 835.80 835.80 51.82 12.12 Knickel, B. 117,920.40 934.60 934.60 934.60 57.95 13.55 McCoy, D. 119,218.30 820.00 820.00 11.89 Neska, T. 117,437.90 1,120.00 1,120.00 1,120.00 69.44 16.24 Employee's Totals for Week 3,450.80 4,270.80 213.96 61.93 Problem 25-2 (continued) Table 2 (1) Employer's OASI Tax for Week (2) Employer's HI Tax for Week Total Pay Subject to FICA OASDI and HI Tax for week (from Table 1 above) $3,037.90 $4,270.80 X.029 Times the total OASDI (12.4%) and HI (2.9%) Tax Rate X.124 Total OASDI and Hl tax for week Less: Employee's OASDI and Hl deductions for week (from Table 1 above) Employer's share of OASDI and HI taxes for week Problem 25-2 (continued) Table 3 (1) Pay (2) Pay Subject to Subject to HI OASDI Tax for Tax for Entire Entire Year Year from 1/1 from 1/1 thru thru 12/31 12/31 Name (3) Employees' OASDI Tax for Entire Year from 1/1 thru 12/31 (4) Employees' HI Tax for Entire Year from 1/1 thru 12/31 Alexander, R. Kawanishi, K. Knickel, B. McCoy, D. Vegka, T. Total wages subject to FICA taxes for the year *Sometimes these two grand totals are different from the total of the individual payroll amounts for each pay period because of rounding. Problem 25-2 (continued) Table 4 (1) Pay Subject to FICA OASDI Tax for Entire Year from 1/1 thru 12/31 (2) Pay Subject to FICA HI Tax for Entire Year from 1/1 thru 12/31 $588,467.60 $591,218.80 Total Pay Subject to FICA OASDI and HI Tax from 1/1 thru 12/31 (from Table 3 above) Times the total OASDI (12.4%) and HI (2.9%) Tax Rate X. 124 X.029 Pay Subject to FICA OASDI Tax from 1/1 thru 12/31 Less: Employee's FICA tax deductions for entire year (from Table 3 above) Employer's share of FICA tax deductions for entire year
